The coronavirus emergency, which stopped travel around the world, forced the heavily indebted American car rental group Hertz to file for bankruptcy in the United States and Canada. The historic brand founded 102 years ago was the first major victim of the pandemic.
Last month the Florida-based company failed to pay a lease and creditors denied a further extension on Friday, triggering the bankruptcy petition and the request for protection from creditors (Chapter 11) in front of an indebtedness which at the end of March amounted to 18.7 billion dollars (4.3 billion dollars of corporate bonds and loans and 14, $ 4 in vehicle-backed debt at special financing branches), but only $ 1 billion in available liquidity. Starting in mid-March, the company zeroed its revenues when travel was almost totally canceled due to the new coronavirus. But the corporate chaos that saw Hertz name his fourth CEO in 6 years also contributed to complicating matters.
The impact of Covid-19 on travel demand was sudden and dramatic, explains the group, causing a sharp drop in the company’s revenue and future bookings. Hertz claims to have taken immediate action that prioritizes employee and company health and safety, while also eliminating all non-essential expenses. However, uncertainties remain about the return of revenue and the complete reopening of the market, which made today’s action necessary, reads a note.
On April 21st, Hertz announced the cut of 10,000 jobs in North America, accounting for 26.3% of its global workforce., to save money due to the uncertainties caused by measures to contain the pandemic. Government travel restrictions have reduced air and land traffic, decimating the vehicle rental market and forcing the vast majority of the approximately 700,000 vehicles in the Hertz fleet to be stored.
The Chapter 11 procedure requires that Hertz and its subsidiaries will continue to operate. The bankruptcy filing concerns US and Canada, while Hertz’s main international operating regions and franchise locations are not included.